Maharashtra plans $10 billion infra fund

The move to create this Infra Fund comes after the state has struggled to create new infrastructure because of the huge debt of Rs 3.30 lakh crore.Krishna Kumar | ET Bureau | Updated: July 07, 2016, 14:21 IST

MUMBAI: In what Maharashtra claims will be a game changer, the state is planning a whopping $10-billion fund, which would be used for building infrastructure in rural areas of the state and specifically in Mumbai.

The move to create this Infra Fund comes after the state has struggled to create new infrastructure because of the huge debt of Rs 3.30 lakh crore. The state is also planning to use the money from this fund to ease the state’s debt. The move to create this Infra Fund comes after many countries like Saudi Arabia, Japan, Germany, Israel and Canada expressed keen interest on investing in the state.

Some of these countries have also sought sovereign guarantee to safeguard their investment.

The state is in talks with the Centre on whether the latter could give a ‘comfort letter’ for specific projects. Maharashtra government officials are optimistic that the fund would be set up within the next three months.

“Talks have been going on for the last four to five months. Many countries like Saudi Arabia, Japan, Germany, Israel and Canada to name a few, have expressed keen interest to invest in the state. A few of these countries have also sought for sovereign guarantee to safeguard their investment.The state is in talks with the Centre on whether a 'comfort letter' for specific projects could be given,” said a senior state government official.

Last month, Kaustubh Dhavse (officer on special duty), a key official in the Chief Minister’s office, who looks after the execution of key infra projects in the state travelled to Delhi where he met an official of Department of Economic Affairs (DEA) and other finance ministry officials to explore the possibility of the Centre giving such comfort letters.

It is learnt that the finance ministry has now asked the state to submit a proposal to the Centre. State government officials said they are evaluating various options for raising the money for the fund.

“We could do it through the Mumbai Metropolitan Region Development Authority (MMRDA), a Special Purpose Vehicle or we could float a body on the lines of the National Infrastructure and Investment Fund (NIIF) that was announced by the Centre,” said an official.

Another official in the know said that the loan would only be in rupee terms so that the hedge risk is not with the government.

Officials are so gung-ho about the move that they claim that there would be no stopping Maharashtra’s growth once the fund is put in place. Maharashtra CM Devendra Fadnavis confirmed to ET that the state is in talks with the Centre on the issue.

“Not every country is asking for the comfort letter only a few countries are. It is just a procedure to ensure that their money is safe. We are looking at a lot of other modalities to,”said Fadnavis.